McCormick & Company, Incorporated (MKC): 9 Reasons to Buy this Spice and Condiments Maker

9. Market beating returns. McCormick operates in an industry where it’s easy to find a company with market-beating returns (see chart below). People like and need to eat. Shareholders in companies that cater to this powerful combination of want and need are richly rewarded.

INGR Revenue TTM data by YCharts

INGR Total Return Price data by YCharts

Industry peer Ingredion Inc (NYSE:INGR) makes ingredients such as corn starches, sweeteners for sodas and other ingredients commonly used in modern food and drug manufacturing. This represents another one of those so called “boring” companies that doesn’t compare to the excitement of computer giant Apple Inc. (NASDAQ:AAPL). Ingredion provides ingredients to a needed industry and is unlikely to succumb to obsolescence.

Ingredion’s revenue and free cash flow increased 75% and 100%, respectively, translating into a market-beating return of 92% over the past five years. This company provides a dividend of more than 2% to its shareholders as of this writing.

The J.M. Smucker Company (NYSE:SJM) makes jelly, peanut butter, and coffee, all items with significant brand recognition, and adds to the eating experience much like McCormick and  Ingredion. Again, unlike Apple, you never need to worry about obsolescence in this industry. This company sports a great balance sheet, generates plenty of cash and offers a 2%+ dividend yield as of this writing.

J.M. Smucker’s revenue and free cash flow increased 125% and 376%, respectively, translating into a total return of 156% over the past five years, beating the total return of the S&P 500 by 131% points during that time.

Conclusion

In summary, McCormick possesses many qualities that make it the perfect addition to your portfolio. It sells a needed product that grows its top and bottom lines. It builds brand equity through new product marketing strategies, ubiquity, and packaging innovation; all important factors in differentiating a commoditized product. High employee ownership means increased pride and a sense of accountability among its workforce. Its comprehensive continuous improvement program means continued focus and discipline in cost savings and operational improvement. Its excellent balance sheet and cash flow support a solid dividend and it operates in an industry with a knack for outperforming the broader market.

The article 9 Reasons to Buy this Spice and Condiments Maker originally appeared on Fool.com.

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